Increasing Sum Assured in a Term Plan: Your Weapon Against Inflation

Life insurance is essential as it plays a significant role in providing for contingencies in one’s life. We buy a life insurance plan for two reasons – passing away prematurely while leaving a dependent family, and retiring without adequate means of income. Assessing the risks and determining the available means for mitigating them will help you plan your finances. It means thinking ahead to the life of one’s family when it is deprived of a regular monthly income. Ask yourself before you buy life insurance: How long will your family need financial support, and how much will they need? Term insurance plans are financial tools that ensure the security of your loved ones.

In order to buy the best term plan, we take an array of factors into consideration, such as monthly income, outgoings, liabilities, and financial goals. When choosing a term plan, you should opt for an optimal level of sum assured to suit your requirements.

Let us discuss in detail an increasing term insurance plan and how it can help you protect your dreams against inflation.

What is an Increasing Term Insurance Plan?

An increasing term insurance plan is a term plan in which the sum assured, chosen at the time of buying the plan, increases by a specified amount each year. This feature is designed to take inflation into account. As we grow older, our responsibilities also increase. The cover that you may have chosen at the plan’s commencement may not be adequate for you later, as income, expenditure, and consequently liabilities grow over time. You should buy a comprehensive term insurance plan that offers features you can benefit from. The iSelect Smart360 Term Plan by Canara HSBC Life Insurance has the option of an increasing sum assured.

How Increasing Sum Assured in a Term Plan Can Help You

The feature of an increasing sum assured allows you to increase your term insurance cover at regular intervals. It helps you manage the rising expenses of your loved ones, which may also keep changing.

Listed below are the benefits of increasing your sum assured in a term plan:

Effective Against Inflation

Inflation is the rate of increase in prices of goods and services over a given period of time. The rate of inflation keeps rising, and hence, it is essential to consider it while buying any financial instrument. Simply put, if you choose an increasing sum assured in a term plan, you can manage the extra expenses without breaking a sweat.

Aligns with Changing Life Stages

Did you buy a term insurance cover when you were single? Now that you are married, are you planning to protect your partner’s financial goals? With the iSelect Smart360 Term Plan, you can add your spouse to the same policy. As your life stages change, your needs and requirements will also change. Hence, an increasing sum assured term plan will help you stay on the right track to manage your finances.

Affordable Premiums

Even if you choose an increasing sum assured option in a term plan, the premiums will remain low and affordable. The premiums will stay constant and will not burn a hole in your pocket. This means that even if you choose to increase the sum assured during the policy tenure, the premium amount will not increase.

How to Decide the Right Sum Assured for You

Choosing the right sum assured is one of the most important steps when buying term insurance. The cover should be large enough to take care of your family’s lifestyle, clear outstanding debts, and meet future goals even in your absence.

Here are some key factors to consider when deciding your sum assured:

• Annual Income: A good thumb rule is to choose a sum assured that is 10–15 times your annual income. This ensures your family’s living expenses are covered for several years.
• Existing Liabilities: Take stock of any home loans, personal loans, or other debts. Your sum assured should be large enough to clear these obligations, so your family is not burdened.
• Future Financial Goals: Think about major milestones like your children’s education, marriage, or caring for elderly parents. Add these to your cover amount so your family’s dreams stay secure.
• Age and Working Years Left: The younger you are, the more years you have left to earn. If you are young, you may need a higher cover to compensate for lost income over a longer period.
• Use Online Tools or Get Expert Advice: Use online term insurance calculators to get an estimate, but also speak with a trusted financial advisor to tailor the amount to your unique situation.

Who Should Opt for an Increasing Sum Assured Term Plan?

An increasing sum assured term plan is ideal for anyone whose financial responsibilities are likely to grow over time. This flexible feature ensures your life cover keeps pace with your changing lifestyle and rising expenses.

Here are some people who may benefit most:

Young Professionals

If you are just starting your career, your income and responsibilities are likely to grow steadily. An increasing sum assured helps you keep your cover in line with your rising income and future commitments.

Newly Married Couples

A new phase of life often comes with bigger financial goals from buying a home to starting a family. An increasing term plan ensures your spouse is protected as your joint responsibilities expand.

Parents Planning for Children

If you plan to have children in the near future, your expenses will naturally increase. Choosing an increasing sum assured now can help you cover future education and childcare costs without needing to buy a new policy later.

Home Loan Borrowers

If you have recently taken a large loan, your liabilities are high, but so is your potential for income growth. An increasing sum assured provides more protection as your income and lifestyle grow alongside your liabilities.

Anyone Expecting Bigger Life Changes

From career growth to moving to a bigger city or supporting elderly parents, your needs will evolve. An increasing term plan gives you peace of mind that your cover grows as life does.

Final Thoughts

If you are young and feel you don’t need to increase your sum assured right now, you can always do it later. You are not required to go through the entire documentation process to increase the sum assured of your existing term plan. Buy a term life insurance plan today and be prepared for every twist in life.

At Canara HSBC Life Insurance, we understand that your financial needs keep evolving. Our iSelect Smart360 Term Plan offers the option of an increasing sum assured, so you can stay protected against inflation and changing responsibilities without hassle. Explore the plan today and secure your family’s future with confidence.

Know more about iSelect Smart360 Term Plan.